Global trustees gather

By August 20, 2008News

More than 40 trade union trustees from 11 countries – representing over US$900 billion in assets under management – met July 9-10 in London to discuss the ongoing shareholder campaign on Burma, labour issues in an investment context and investing in green jobs. Participants included trustees from major public sector pension funds, such as HESTA Superfund (Australia), Government Employees Pension Fund (South Africa), ATP (Denmark), ABP and PGGM (The Netherlands), and the State of Maryland (US). Several European occupational funds were also present, as was the French social security buffer fund, the Fonds de Reserve des Retraites (FRR). Canada was represented by two trustees from the BC Public Service Pension Plan, and representatives from Bâtirente, NUPGE and SHARE. The meeting was organized by the Global Unions Committee on Workers’ Capital (CWC), which is coordinated at SHARE.

Burma shareholder engagement

The trustees reviewed the recent Burma shareholder engagement and divestment initiatives, recalling the Global Unions call to divest from the country. Many investors have preferred to engage with companies operating Burma, but French Oil Company Total is finding it increasingly difficult to gain traction with the military regime, and Chevron is only a minority partner. Propelled by strategic military and energy considerations, China’s presence in Burma is ever-increasing: Trustees highlighted the need for the international labour movement to formulate a strategic approach on dealing with Chinese companies, despite the limited investor successes in establishing dialogues with companies such as PetroChina. South Korean conglomerate Daewoo International is also investing in a massive offshore natural gas field, which will be online by 2010 and will provide substantial royalty payments to the regime.

On the second day of the meeting, the trustees were briefed by Burma Campaign UK (BCUK), a leading civil society organization, on the economic and political situation in the country. They learned of BCUK’s report and campaign focused on insurance companies operating in Burma, and recommended that (re)insurance coverage of multinationals operating in Burma be considered as a possible next step in the CWC Burma campaign.

The impact of labour relations on investment returns

Positive labour relations, including freedom of association, are directly related to positive investment returns, trustees believe, although direct causality has never been explicitly proven in the investment world. Moreover, fund managers are not sufficiently considering labour issues in their investment decisions, perhaps because of insufficient signals from asset owners. Trustees heard presentations evidencing the relationship between human capital and financial performance, and how the French FRR integrates labour issues in its statement of investment principles by referring to the UN Global Compact. Overall, social considerations are not being analyzed with the same intensity as either environmental or governance issues in extra-financial investment analysis. This is likely to change in coming years, and the trustees agreed there is significant scope and opportunity for trade unions to collaborate and provide critical input on this.

Investing in green jobs

Participants were also briefed on the international labour movement’s endorsement of the Kyoto agreement on climate change, and labour’s emphasis on green job creation. Significant employment opportunities will arise in renewable energy sources (wind, wave, tidal and solar), energy conservation and clean coal technology. However, a “just transition” is needed for workers in industries impacted by this evolution, many of whom are in industries that traditionally enjoy greater union density, trade union speakers emphasized. Trustees debated a range of investment opportunities, including in power generation, energy conservation, and building rehabilitation. The importance of a sound government policy framework on clean technology was emphasized: Germany has 250,000 jobs in the clean tech sector, with 100,000 vacancies. The complementary role of venture capital to seed innovative technological breakthroughs and public sector support for research and development of critical yet expensive new technologies was also discussed. Over the next 20 years, the structural changes arising from climate change-related policies will be as significant as demographic changes in restructuring pension fund investments, participants concluded.

Over the two-day conference, trustees also received updates on the Principles for Responsible Investment, discussed recent engagement initiatives between Global Unions and private equity representatives, and discussed the multi-faceted challenges of infrastructure investments.